Tackling the labour market participation crisis among older people
28 Jun 2022
Rosie Gloster, Principal Research Fellow
Policy changes to retirement and pensions, including the abolition of the statutory retirement age in 2011, aimed to give individuals more freedom to make decisions about their retirement, and enable people to work for longer. However, rather than labour market participation increasing in recent times as hoped, since the pandemic there are around 600,000 fewer people aged 50 or over, active in the labour market (see Figure 1; IES, 2022).
This has contributed to an increasing demand for labour, with 1.3 million vacancies, and employers reporting challenges recruiting. A new nationally representative survey of 2,655 40–75-year-olds commissioned by the Department for Work and Pensions and conducted by the National Centre for Social Research in partnership with the Institute for Employment Studies and Pensions Policy Institute, investigated retirement transitions. The fieldwork was conducted between November 2020 and February 2021, during the pandemic. This new research sheds light on the types of government action and workplace practices that might offer solutions.
Figure 1: Change in economic inactivity by age, since start of Covid-19 pandemic
Source: IES analysis of Labour Force Survey
Increasing use of flexible working for those who wish to do so
The ability to work flexibly (mentioned by 44%) and the potential to work fewer hours in the approach to retirement (52%) were cited by respondents as central factors that would enable them to work longer. One in five respondents said they had requested a change in their working arrangements in the last five years (20%). The survey highlighted a potential gap between employees’ future aspirations for flexible working and forms of work that already retired respondents had accessed. Just over half (54%) of those not yet retired but in paid work said they wanted to work less as they approached retirement. A smaller proportion of those who had already retired had been able to do this (34%), suggesting it is not easy for all employees to achieve this change.
Access to flexible working varies by income and occupation, with those earning £44,000 or more a year (60%) and those in managerial and professional occupations (64%) being most likely to be working flexibly. Flexible working was least prevalent in caring, leisure and other service occupations (46%) as well as sales/customer service (42%) and elementary occupations (31%). Those with greatest financial need to work longer were least able to access flexible work. Alongside job design, there may simply be an affordability issue in accessing forms of flexibility that reduce working hours.
Actively supporting carers within the workplace and with affordable care in formal settings
Caring can encompass responsibilities for elderly relatives, children, and grandchildren. The pandemic increased care load due to recruitment and viability challenges in adult social care as well as closures of childcare settings. These caring requirements have fallen to adults in an unpaid capacity, including grandparents caring for grandchildren. The survey found some groups were more likely to have made a flexible working request than others – and where these are not accommodated there is a risk that people are pushed out of the labour market. Carers were more likely to request a change in their working arrangements; 26 per cent of carers had requested a change compared to 17 per cent of those who were not carers. Over a third of all respondents that were not fully retired (34%) reported that it would be helpful if employers were actively supportive of caring needs. Actively inviting dialogue with individual employees might help to determine any forms of flexibility that would fit their circumstances and enable them to continue in work and balance caring responsibilities. Previous IES research exploring what works to support carers to stay in work found that it could take just one bad experience – a point when the juggle felt impossible, e.g. a domestic accident happened, or an employer was unsympathetic - for some carers to leave work.
Together with a recent ONS survey of older workers and employment, this research highlights challenges for employers and government to tackle the participation crisis among older people. On the one hand thinking creatively within workplaces to ensure that employees in all sectors, including those who most need to work longer for financial reasons, can access flexible working arrangements where required, rather than be pushed out of the labour market. In the face of recruitment challenges, workplaces might consider how to become, ‘actively supportive’ and inclusive of employees varied needs. Alongside accommodating flexible working requests where possible and creating workplace cultures that are supportive of employees with caring responsibilities, signposting to government resources, such as the Midlife MOT would encourage employees to consider the full implications of retirement transitions (PPLL found that only six per cent of respondents had heard of it, but once the *Midlife MOT was explained to them, 47 per cent of respondents who had not previously heard of it said they would make use of the tool). More generally, government needs to consider how to engage people who leave the labour market and do not claim benefits, so are therefore not in contact with employment support services. Government also needs to support and invest in our caring institutions, for example improving the pay and conditions of the adult social care workforce, which have supported and enabled an increase in labour market participation in recent decades.
*The Midlife MOT is a free online support tool to encourage more active planning by people in their 40s, 50s and 60s in the key areas of work and skills, health and wellbeing and finances.
Any views expressed are those of the author and not necessarily those of the Institute as a whole.